Correlation Between Barloworld and Consilium Acquisition

Can any of the company-specific risk be diversified away by investing in both Barloworld and Consilium Acquisition at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Barloworld and Consilium Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barloworld Ltd ADR and Consilium Acquisition I, you can compare the effects of market volatilities on Barloworld and Consilium Acquisition and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Barloworld with a short position of Consilium Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Consilium Acquisition.

Diversification Opportunities for Barloworld and Consilium Acquisition

0.51

Correlation Coefficient

Barloworld  Consilium Acquisition

Very weak diversification

The 3 months correlation between Barloworld and Consilium is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Consilium Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consilium Acquisition and Barloworld is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Barloworld Ltd ADR are associated (or correlated) with Consilium Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consilium Acquisition has no effect on the direction of Barloworld i.e., Barloworld and Consilium Acquisition go up and down completely randomly.

Pair Corralation between Barloworld and Consilium Acquisition

Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 4.78 times more return on investment than Consilium Acquisition. However, Barloworld is 4.78 times more volatile than Consilium Acquisition I. It trades about 0.08 of its potential returns per unit of risk. Consilium Acquisition I is currently generating about 0.06 per unit of risk. If you would invest  342.00  in Barloworld Ltd ADR on October 22, 2024 and sell it today you would earn a total of  271.00  from holding Barloworld Ltd ADR or generate 79.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	78.07%
Values	Daily Returns

Barloworld Ltd ADR  vs.  Consilium Acquisition I

Barloworld ADR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barloworld Ltd ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Barloworld showed solid returns over the last few months and may actually be approaching a breakup point.

Consilium Acquisition

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Consilium Acquisition I are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent primary indicators, Consilium Acquisition may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Barloworld and Consilium Acquisition

The main advantage of trading using opposite Barloworld and Consilium Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Consilium Acquisition can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Consilium Acquisition will offset losses from the drop in Consilium Acquisition's long position.

The idea behind Barloworld Ltd ADR and Consilium Acquisition I pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.